Anonymous
By the Department of Justice
A county organized health system (COHS) that arranges services for Medi-Cal enrollees in Santa Barbara and San Luis Obispo counties and three Central Coast health care providers have agreed to pay a total of $68 million to resolve allegations that they violated the False Claims Act and the California False Claims Act by submitting or causing the submission of false claims to Medi-Cal related to Medicaid Adult Expansion under the Patient Protection and Affordable Care Act (ACA).
The four entities that entered into settlement agreements with the United States and the State of California are the Santa Barbara San Luis Obispo Regional Health Authority, doing business as CenCal Health, a COHS that contracts to arrange for the provision of health care services under Medi-Cal, which is California’s Medicaid program; Cottage Health System, a not-for-profit hospital network operating in Santa Barbara County; Sansum Clinic, a non-profit outpatient clinic operating in Santa Barbara County; and Community Health Centers of the Central Coast (CHC), a non-profit community health center operating in Santa Barbara and San Luis Obispo counties.
The settlement agreements were executed earlier this month, and late Wednesday a federal judge unsealed the “whistleblower” case naming the entities.
Pursuant to the ACA, beginning in January 2014, Medi-Cal was expanded to cover the previously uninsured “Adult Expansion” population – adults between the ages of 19 and 64 without dependent children with annual incomes up to 133% of the federal poverty level. The federal government fully funded the expansion coverage for the first three years of the program. Under contracts with California’s Department of Health Care Services (DHCS), if CenCal did not spend at least 85% of the funds it received for the Adult Expansion population on “allowed medical expenses,” CenCal was required to pay back to the state the difference between 85% and what it actually spent. California, in turn, was required to return that amount to the federal government.
The four settlements resolve allegations that CenCal, Cottage, Sansum, and CHC knowingly submitted or caused the submission of false claims to Medi-Cal for “Enhanced Services” that were purportedly provided to Adult Expansion Medi-Cal members: by Cottage between January 1, 2014 and June 30, 2016; by Sansum and CHC between January 1, 2015 and June 30, 2016; and by certain other healthcare providers between January 1, 2014 and June 30, 2016.
The United States and California alleged that the payments were not “allowed medical expenses” permissible under the contract between DHCS and CenCal; were pre-determined amounts that did not reflect the fair market value of any Enhanced Services provided; and/or the Enhanced Services were duplicative of services already required to be rendered. The United States and California further alleged that the payments were unlawful gifts of public funds in violation of the California Constitution.
As a result of the settlements, CenCal will pay $49.5 million, Cottage will pay $9 million, Sansum will pay $4.5 million, and CHC will pay $3.15 million to the United States. In addition, California will receive payments totaling $1.85 million.
“These historic settlements demonstrate our steadfast efforts to eradicate fraud involving Medicaid Adult Expansion,” said United States Attorney Martin Estrada. “Health care systems and providers are on notice that the False Claims Act provides us with a powerful tool to ensure that taxpayer-funded health care programs are used for patient care, and not for furtive financial gain.”
“Medicaid expansion funds must be used for their intended purpose of providing health care services to low-income individuals,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “When health care systems and providers knowingly misuse Medicaid funds, they will be held accountable.”
“Federal health care programs are an important resource for millions of Americans to receive medical care,” said Timothy B. DeFrancesca, Special Agent in Charge at the Department of Health and Human Services, Office of Inspector General (HHS-OIG). “HHS-OIG will continue to ensure that federal health care funds are used as intended and protected from fraud, waste, and abuse.”
“Medi-Cal is a lifeline that provides access to free or affordable healthcare services for millions of Californians and their families,” said California Attorney General Rob Bonta. “When any healthcare provider or agency defrauds the program, they break the public’s trust and put their own bottom line before the patients who count on them for honest, quality care and services. I am grateful to the USDOJ for its extensive efforts throughout the course of this investigation. The California Department of Justice and our law enforcement partners will continue to hold accountable those who defraud the Medi-Cal program, and protect those it serves.”
The civil settlements include the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Julio Bordas, CenCal’s former medical director. Under the act, a private party can file an action on behalf of the United States and receive a portion of any recovery. Dr. Bordas will receive approximately $12.56 million as his share of the federal recovery.
The United States previously settled similar allegations against Dignity Health (which operates Arroyo Grande Community Hospital, French Hospital Medical Center in San Luis Obispo, and Marian Regional Medical Center in Santa Maria) and Twin Cities Community Hospital and Sierra Vista Regional Medical Center, two subsidiaries of Tenet Healthcare Corporation, relating to payments they received from CenCal under the Adult Expansion program.
The partial resolution obtained in this matter was the result of a coordinated effort between the United States Attorney’s Office; the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section; and the California Department of Justice, with assistance from HHS-OIG and DHCS. This case is being handled by Assistant United States Attorney Jack D. Ross of the Civil Fraud Section, and Trial Attorneys Mary Beth Hickox-Howard and Tiffany L. Ho of the Commercial Litigation Branch.
The investigation of this matter illustrates the government’s emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).
The claims resolved by the settlements are allegations only and there has been no determination of liability.
Healthcare Providers Issue Responses to DOJ Statements
Sansum Clinic
Sansum Clinic, the oldest and largest non-profit outpatient health care provider on the California Central Coast, announced that it has recently settled a lawsuit with state and federal regulators concerning an alleged overpayment related to the expansion of Medicaid in 2014-2016.
Like many other health care providers, Sansum Clinic participated in a Medi-Cal expansion program designed by our long-time health plan partner, CenCal Health. “Our intention was to participate in a program that, along with CenCal, would allow us to provide for the health care needs of the previously uninsured individuals that were now newly enrolled in Medi-Cal,” said Sansum Clinic CEO Kurt N. Ransohoff, MD, FACP. “Sansum disagrees with the government’s claims, and we do not believe it was an overpayment or that Sansum did anything wrong or inappropriate. However, we decided to settle this matter and return the alleged overpayments instead of engaging in costly, time-consuming litigation that would consume additional health care resources and distract us from our focus on providing high-quality health care to patients, as we have for over 100 years.”
The lawsuit is one of numerous similar suits that have been filed in California as a result of estimates used to finance the expansion of Medicaid as the Affordable Care Act was implemented. Payments from health plans to support the transition of the Access Coordination and Expansion (ACE) Program were common in California. The lawsuit claimed Sansum had received overpayments in excess of $7 million through payments received from CenCal Health, a community-based health plan that administers Medi-Cal benefits in Santa Barbara and San Luis Obispo counties. While Sansum received $7.1 million in payments and disagrees with the government’s claims, it agreed to return approximately $5 million of that amount as part of the settlement.
Sansum Clinic is one of several health care providers in Santa Barbara County, in addition to CenCal, that is returning funds. Unlike some other entities that have returned funds, Sansum was not required by the Office of Inspector General of the Department of Health and Human Services to enter into a Corporate Integrity Agreement.
Sansum Clinic, founded in 1921 and one of the area’s largest employers, serves over 125,000 patients seeking family medicine, urgent care and nationally recognized specialty care and oncology services. It has received “Elite” status under American Physician Groups’ standards of excellence and has been rated Highest Overall on the Central Coast for meeting national standards of health care by the California Office of the Patient Advocate.
CenCal Health
“CenCal Health (CenCal) has reached a settlement agreement with the Department of Justice (DOJ) and other regulators regarding the disbursement of Medicaid funding through the Affordable Care Act (ACA) between 2014 and 2016. This settlement marks the conclusion of the government’s eight-year-old payment dispute with CenCal and the settling providers.
ACA funds were made available for CenCal’s community of health care professionals to provide services to the then-newly eligible Medi-Cal beneficiaries. CenCal’s work was done publicly and transparently and aimed at coordinating the health care needs of 16,000 formerly uninsured individuals who obtained coverage under the ACA. Those funds were not retained by CenCal for its own purposes, but instead used to support the most vulnerable in our community.
CenCal disagrees with the government’s position: We believe these past disbursements to providers under this program were lawful and proper, and made in good faith within the context of minimal regulatory guidance. Regardless, we agreed to settle and put this matter behind us, allowing us to refocus on our mission – improving the health and wellbeing of the people we serve by providing access to high-quality health services.
Under the settlement agreement, CenCal will pay $49.5M and enter into a Corporate Integrity Agreement for a period of five years. We wish to move forward proactively and productively with the government, reflecting our values of compassionate service, integrity, collaboration and improvement. As a trusted leader in advancing health equity, we remain focused on our important mission so that our communities thrive and achieve optimal health together.”
Crooks! All of them! Is there one healthcare option that we can actually trust?
cash
Allow another healthcare org to build a hospital nearby and force Cottage to compete for its patients. Then maybe they’ll respect them.
I would trust most witch doctors or palm readers more than I trust Sansum or the Cottage ER.
Sansum’s response is laughable. When are they not defensive? “We paid $5M that we don’t have out of the goodness of our heart even though we did nothing wrong at all.” Yeah ok. The DOJ doesn’t take up just any case.
UCLA is coming in hot the last year or so. Competition is good.
I understand but,, the only other place I will go in Santa Barbara.
Dr. Jones, Dr. Kahmann, Dr.Wright etc. were the best to me.
Went there for a procedure recently, and the meals are almost better than some restaurants, although the wait is about the same. LOL
Oh my goodness, healthcare payment is so complex. I doubt these organizations were all intentionally and systematically overcharging medi-cal patients, but only someone with a PhD in healthcare economics could possibly understand this disaster.
Medi-cal grossly underpays providers (it’s why so many docs don’t accept it). My guess is they were providing care, billing, getting paid by Cen-Cal, then the government was upset that they paid/billed too much. I would think that settling this case is cheaper than going to court, dragging this out and potentially losing a larger amount.
In terms of building more hospitals for more competition, for this small community in Santa Barbara we already have significantly more subspecialty services than any town our size has any right to have. I would venture a guess that Cottage has a deeper call panel of specialists than the state of Wyoming. Where would we eve put a new hospital that would only take up expensive real estate? How is paying for the infrastructure and another C-suite, tech staff, etc anywhere close to fiscally responsible?
All I know is that we pay thousands a month for our family to have insurance, then still have to pay thousands of dollars to use that insurance, while also paying thousands of dollars for those with medi-cal and medicare to have insurance, too. I think we have excellent healthcare here in Santa Barbara, it’s the system that’s broken.
These providers and others rip off sick and injured people left and right. It’s basically their business model at this point. Bill as many tests as you can, explain as little as possible what the costs are. Make sure you hook the morphine up before you have them make any care decisions! Crooks. Going straight to hell.
CanCal does the exact opposite of what you’re describing.
I agree with Locatransplant. Too bad this happened,! But it was several years ago, and most likely the errors were unintentional.
Unintentional?? Hahaha. Healthcare has dropped the care and added profit to its name. The suits are making a million dollars per year courtesy of us.
I’ve had excellent care at both Cottage and Sansum. L review the billings that are sent to me . If a doctor/ medical facility bills $100 for example, they are lucky to see $40. Based on the complexities and the ambiguity of government programs it was probably an unintentional mistake. Good to settle.
Chillingrillin, next time you have the need for medical attention you should probably contact the Chumash for expert medical service from one of the religious elders.
I have had nothing but excellent care from both Cottage and Sansum Clinic. Since these over-billing claims are behind the scenes, we can’t really comment about the issue except to note that health care billing in the US is very complicated and convoluted. I knew a guy that got very rich developing medical billing software.
Most folks who use the services at Sansum and Cottage are fully and completely satisfied. Not everyone, but the vast, vast, VAST majority of us would not and will not go elsewhere for our healthcare needs. Just like other extreme opinionated dislikes (ie. Target at 5 Points, CFA traffic, News Press, State St. configuration, Cota/Mission/beach bike paths, and so on), we will simply get over it and move on with ours short lives.
Don’t understand how anyone can have an opinion. I read the article and did not see examples of what kind of billing happened for whom and for what. What kind of fraud was it? False patients? Billing for services not done? Spending more than 15% on administration? Nothing makes sense.